Sec. 254. Vendor Liable If He Accepts Proceeds

"All persons who act for or in the name of the owner in bringing about the transaction must be deemed his agents where he accepts the fruits of their efforts, and all the methods employed by them are imputable to him; he may not even, though innocent, receive and recover upon a security given on the sale and at the same time disclaim responsibility for the fraud by means of which the purchaser was induced to deliver it."6 "It is an established principle of law that where a person acts for another who accepts the fruits of his efforts, the latter must be deemed to have adopted the methods employed, as he may not, even though innocent, receive the benefits and at the same time disclaim responsibility for the fraud by means of which they arose."7 "Where a principal adopts and ratifies the acts of his agent by receiving the fruits of it or otherwise, he assumes responsibility for the instrumentalities which the agent has employed in his behalf to effect the contract."8 Even where the agent's false representations were never authorized or suspected by the principal,9 a reception and retention of the proceeds may make the latter responsible for the fraud.10

4 Mayo v. Wahlgreen, 50 Pac. 43 (Colo. 1897), (citing Kennedy v. McKay, 43 N. J. L. 393; Decker v. Fredericks. 47 N. J. L. 469; 1 Atl. 470).

5 Alger v. Anderson. 78 Fed. Rep. 729 (1897). See also Clark & Skyles on Agency, pp. 1112-1113; 1 Am. & Eng. Ency. of Law (2nd Ed.), 1178-1179.

Sec. 255. Principal Bound By Agent's Representations

In Mayer v. Dean, 115 N. Y. 560, 561 (1889), it is said: "There is no doubt of the general rule that to a certain extent a principal is bound by the representations of his agent made in effecting a sale of property. Such an agent must be presumed to possess authority to make such representations in regard to its quality and condition as usually accompany such transactions, and his principal cannot receive the fruits of a bargain without adopting the instrumentalities employed by his agent in bringing it to a consummation.11 In an action between vendor and vendee, knowledge possessed by either the principal or the agent is, respectively, imputable to each other, and an agent, whose principal has knowledge of latent defects in property proposed to be sold, cannot honestly represent to its intending purchaser that it is free from such defects. It is well settled in this state that a principal cannot retain the benefits of a contract obtained through the misrepresentations of his agent, even though the principal was ignorant of the representation and really intended no fraud. It was held in Bennett v. Judson, 21 N. Y. 238 (1860), that a vendor of land is responsible for material misrepresentations, in respect to its location and quality, made by his agent without express authority, and in the absence of any actual knowledge by either the agent or the principal, whether the representations were true or false. * * It is consonant with reason and justice that a principal should not be allowed to profit by the fraud of his agent; and if he adopts the contract made in his behalf, although ignorant of the fraud, he should be held liable to make compensation to the party injured by it."12

6Fairchild v. McMahon. 139 N. T. 290 (1893) ; Garner v. Mangam, 93 N. T. 642 (1883); Rhoda v. Annis, 75 Me. 24, 25 (1883); Forster v. Wilhusen, 14 Misc. 520 (N. Y. 1895).

7 Taylor v. Commercial Bank, 174 N. T. 188 (1903). To the same effect are Carr v. Nat. Bank & Loan Co., 43 App. Div. 10 (N. Y. 1899) ; Seeber v. People's Bldg., etc., Assn.. 36 App. Div. 316 (N. Y. 1899) ; People v. Campbell. 22 App. Div. 170 (N. Y. 1897); Reynolds v. Witte, 13 S. C. 16 (1879). See also Reitman v. Fiorillo, 72 Atl. 74 (N. J. 1909, and 3 Columbia Law Review. 395.

8Rumsey v. Briggs, 139 N. Y. 331 (1893) ; Lane v. Black, 21 W. Va. 626 (1883).

9Law v. Grant, 37 Wisc. 557 (1875).

10 Coykendall v. Constable, 99 N. Y. 314 (1885); Alger v. Anderson. 78 Fed. 735 (1897), (citing Franklin v. Ezell. 1 Sneed 497; Barnard v. Iron Co., 85 Tenn. 139; 2 S. W. 21 ; Jewett v. Carter. 132 Mass. 335; Cont. Ins. Co. v. Ins. Co. of Penn., 2 C. C. A. 535; 51 Fed. 890; 2 Jag. Torts. 267, 271; Story on Agency. Sec. 134. 452; 1 Am. & Eng. Enc. of Law (2nd Ed.), 1158, 1159; 1 Bigelow on Fraud. 225-228; 2 Kent Comm., marg. p. 621 and notes; Kennedy v. McKay, 43 N. J. L. 288; Mason v. Crosby, 10 Fed. Cas. 1016; Doggett v. Emerson, 7 Fed. Cas. 804).